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A supplier sells Hipoint-brand pens to stationary shops. The annual demand is approximately 24,000 pens. The supplier pays SR5 for each pen and estimates that the annual holding cost is 30 percent of the pen's value. It costs approximately SR350 to place an order. The supplier currently buys 1000 pens per order i. Determine the annual ordering and inventory cost (in SR) for current order quantity. ii. Determine the economic order quantity (EOQ). iii. Determine the total annual cost for the EOQ

A supplier sells Hipoint-brand pens to stationary shops. The annual demand is approximately 24,000 pens. The supplier pays SR5 for each pen and estimates that the annual holding cost is 30 percent of the pen's value. It costs approximately SR350 to place an order. The supplier currently buys 1000 pens per order i. Determine the annual ordering and inventory cost (in SR) for current order quantity. ii. Determine the economic order quantity (EOQ). iii. Determine the total annual cost for the EOQ

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter18: The Management Of Accounts Receivable And Inventories
Section: Chapter Questions
Problem 17P
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Question 3:
A supplier sells Hipoint-brand pens to stationary shops. The annual demand is
approximately 24,000 pens. The supplier pays SR5 for each pen and estimates that the
annual holding cost is 30 percent of the pen's value. It costs approximately SR350 to place
an order. The supplier currently buys 1000 pens per order
i. Determine the annual ordering and inventory cost (in SR) for current order
quantity.
ii. Determine the economic order quantity (EOQ).
iii. Determine the total annual cost for the EOQ  

Question 3: A supplier sells Hipoint-brand pens to stationary shops. The annual demand is approximately 24,000 pens. The supplier pays SR5 for each pen and estimates that the annual holding cost is 30 percent of the pen's value. It costs approximately SR350 to place an order. The supplier currently buys 1000 pens per order i. Determine the annual ordering and inventory cost (in SR) for current order quantity. Determine the economic order quantity (EOQ). Determine the total annual cost for the EOQ ii. iii. Question 4 An electronics shop sells 6000 headphones in a year and the sales is relatively constant throughout the year. These headphones are purchased for SR 20.00 each, and the lead time is three days. The holding cost per headphone per year is 10% of the unit cost and the ordering cost per order is SR 75. There are 300 working days per year. Calculate the following: (i) What is the annual holding cost? (ii) In minimizing the cost, how many orders would be made each year? (iii) Given the EOQ, what is the total annual inventory cost (including purchase cost)? (iv) What is the time between orders? (v) What is the ROP?
Transcribed Image Text:Question 3: A supplier sells Hipoint-brand pens to stationary shops. The annual demand is approximately 24,000 pens. The supplier pays SR5 for each pen and estimates that the annual holding cost is 30 percent of the pen's value. It costs approximately SR350 to place an order. The supplier currently buys 1000 pens per order i. Determine the annual ordering and inventory cost (in SR) for current order quantity. Determine the economic order quantity (EOQ). Determine the total annual cost for the EOQ ii. iii. Question 4 An electronics shop sells 6000 headphones in a year and the sales is relatively constant throughout the year. These headphones are purchased for SR 20.00 each, and the lead time is three days. The holding cost per headphone per year is 10% of the unit cost and the ordering cost per order is SR 75. There are 300 working days per year. Calculate the following: (i) What is the annual holding cost? (ii) In minimizing the cost, how many orders would be made each year? (iii) Given the EOQ, what is the total annual inventory cost (including purchase cost)? (iv) What is the time between orders? (v) What is the ROP?
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